The WACC of Pan-Pacific Co Ltd (007980.KS) is 6.4%.
| Range | Selected | |
| Cost of equity | 10.00% - 20.50% | 15.25% |
| Tax rate | 17.80% - 22.50% | 20.15% |
| Cost of debt | 5.10% - 6.70% | 5.90% |
| WACC | 5.1% - 7.7% | 6.4% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 1.19 | 2.41 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.00% | 20.50% |
| Tax rate | 17.80% | 22.50% |
| Debt/Equity ratio | 5.2 | 5.2 |
| Cost of debt | 5.10% | 6.70% |
| After-tax WACC | 5.1% | 7.7% |
| Selected WACC | 6.4% | |
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for 007980.KS:
cost_of_equity (15.25%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (1.19) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.